Just a point of order. The companies currently licensed are also the OWNERS of the hardware that constitutes the radio or TV station. Just because ACORN or a labor union garners the license doesn't convey the right to use the hardware of the previous licensee. They would have to either purchase it or set up their own hardware. That's millions per station. A wise owner could simply wait out the little game. A license without hardware is worthless. It also takes skilled personnel to operate the gear.
Unfortunately, that is non-operative.
The actual license constitutes about 93 to 96% of value of a TV station.
Example, in let's say, in San Diego or any other larger middle-size city, the building housing the station, with all the electronics, is worth somewhere between 6 and 15 million, depending where it is located, how new, etc. The electronics are about 3 million of that.
But to buy that station today, with the license intact, you would have to spend somewhere between 450 and 800 million. The cost is predicated, not on the building, but on the stations ability to make money. A station in San Diego should be dropping somewhere between 45 and 75 million to the bottom line, and revenue producers such as this sell at about 10 times earnings.
$450,000,000 to $750,000,000 with the license intact, $6,000,000 to $15,000,000 without that license.
Suppose you are just given something worth $435,000,000 minimum (the license.) Think you can get someone to lend you $6,000,000 to $15,000,000 to let that free gift of the license begin to make $50,000,000 +/- a year?
Look at in reverse. You are the current owner of an asset you paid $500,000,000. With a stroke of pen, the government can make your asset drop in value to $6,000,000 / $15,000,000. How hard are you going to kiss up to that government, especially when you still owe that $300,000,000 loan you took out to buy the station?!?!?!?
Thanks MindBender26.You always have great insights.
So was the original 7-year licensing period originally established to insulate media from politics of an administration?
The OFF switch on my TV works flawlessly. It is in factory new condition with little wear.